Taxes on affiliate marketing income

What exactly is an affiliate marketing programme?

The affiliate program gives rise to affiliate income. The easiest way of describing the affiliate program is to say that you get paid through a referral code. You list the product or service on your website, and when a consumer orders the same, you get paid in a percentage. Referral income is also known as a commission payment.

How much do companies pay for the affiliate program?

The affiliate program for different companies is different. Various companies and websites offer a different percentage. Like Amazon, some companies offer you different commissions and even pay you for every article you list over the website.

How do you pay taxes on affiliate income?

Although if you are employed, you do not have to worry about paying affiliate income taxes, as it is deducted right at the income source. However, if you have another source of income apart from your salary or a self-employed person, you will need to fill out the self-assessment form with HMRC.

Tax Implications on Affiliate income in UK

If you are earning through affiliate marketing, then you should definitely fill out the self-assessment form.

How are affiliate income earners classified?

Well, as per the laws in the UK, affiliate marketers or earners come under trades. Since all affiliate marketers are provided with a commission, the law and the government classifies such people as traders. So, if you are earning through affiliate marketing and have a job alongside, you will still be classified as a trader, and you will be required to pay affiliate income tax on such income by filling the self-assessment form.

Are there any allowable expenses for the self-employed?

When you are classified as a trader or a self-employed person, there are some expenses that you will require to run your business. These expenses could be the costs of telephone bills, running your website or any other cost. Such costs are deducted from profits, and you do not need to pay taxes on them. However, you will be required to pay taxes on the profit that remains.

How do you pay tax when you earn through affiliate marketing UK?

Affiliate income comes from affiliate marketing, and there are two ways to go about it.

  • First, if you are a sole trader and your sole income is through affiliate marketing, you will not have to pay affiliate marketing tax on the entire sum you earn. So, until you have earned £123 per week, you will not be required to pay tax. The amount of £123/week is the free allowance zone; anything above that you will need to pay tax on as per the ongoing tax rates.
  • If you have a job and earn a sum through affiliate marketing, you are liable to pay affiliate marketing tax on the entire sum. You will be required to register with the HMRC and know exactly how much you owe to the government.

As an affiliate marketer, do I need to pay VAT?

As a successful affiliate marketer, you need to check out VAT expenses. If your income is more than £85,000 in the past 12 months, then you will have to register for VAT as well.

What are the allowable expenses for affiliate marketers?

If you are an affiliate marketer, then here are some allowable expenses:

  • Purchasing a domain name can be offset.
  • If you buy some memberships or e-books concerning your site or your work, even those are allowable.
  • If you travel for your affiliate marketing deals, then the cost of your travels will be included as well.
  • Using your home as an office can also add an amount to your allowable expenses.

However, a point to remember is that there is no definitive list of allowable costs for affiliate marketers. All individuals who take part in affiliate marketing will have different costs, and the allowable costs will depend on the reason and the type of business.

Submitting tax return

Using the HMRC online tax return service is the most convenient way to send your tax return. To use this service, you will need a user ID and password, which you will receive when you register for your self-assessment. The UK tax year runs from April 6th to April 5th of the following year. Make sure you dont miss any deadlines, or you’ll face penalties.

Submission of tax return is not at all an easy affair as your one mistake can prove to be a costly one. Our personal tax accountants at dns accountants can help you submit a tax return in a short time and most efficiently, so that you will feel relaxed and comfortable and concentrate on your other core business activities that you cannot take due to time issues.

In case you are having any query or want specialist advice on "Investing in properties through a trading company", kindly book a call with us.

Speak with an expert

Any questions? Schedule a call with one of our experts.

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

  • Book a free consultation
Receive accounting news and updates in your inbox

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.


See how dns can help
you today.

Save tax
Save tax

Our experts will work with you to reduce your corporation, personal or any other tax liability, all within the rules of the UK tax legislations. We’ll ensure you’re claiming all allowances and expense claims that you would be elegible for.

Reduce your admin
Reduce your admin

We give free software to all of our clients. You’ll be able to raise sales invoices, snap pictures of receipts and be MTD compliant with ease. You can even manage your business anywhere there’s an internet connection, thanks to our mobile app!

Grow your business
Grow your business

Successful business owners are those that are on top of their numbers. Businesses are driven by the numbers behind them. If you’re not reviewing your profit & loss or balance sheet regularly, how would you know how your business has performed and how would you make proper business decisions? We can help you make sense of your numbers.

Free Business Software!

Limited time only!

Free Business Software

Say Goodbye to Bookkeeping Hassles: Nomi offers Free Receipt Processing and big savings!

  • Built in payment solutions.
  • Track profitability, debtors and creditors
  • Snap pics of receipts with the mobile app
  • Free Receipt Processing
  • Hasslefree Bookkeeping
  • Cost Reduction
Get Started
Close nomi